While many ESG strategies are widely used across the industry, there continues to be a lack of consistency in the ESG-related terminology and definitions used throughout the investment fund industry, especially with regard to ESG strategies, which increases the potential for investor confusion around ESG-Related Funds. Staff note, however, that since the publication of the 2022 Notice, the CFA Institute, Global Sustainable Investment Alliance, and Principles for Responsible Investment published a set of harmonized definitions for responsible investment approaches.² Staff continue to encourage industry participants, including IFMs, to develop and use common ESG-related terms and definitions, particularly with regard to ESG strategies, which would enable investors to better understand ESG-Related Funds and make inform ed investment decisions about them.
Guidance regarding the use of ESG-related terminology in fund names, regulatory documents, and sales communications is included below under “ESG-related terminology”.
² CFA Institute, Global Sustainable Investment Alliance and Principles of Responsible Investment, “Definitions for Responsible Investment Approaches” (November 2023), accessible at: https://rpc.cfainstitute.org/-/media/documents/article/industry-research/definitions-for-responsible-investment-approaches.pdf.